Central banks and governments are taking a gamble
Central banks and governments are taking a gamble tighten financial conditions...' assuming the global economy is strong enough to take tightening in unison'.
'Despite market commentators talking of a December hike after the Fed missed their chance to move in September, it is unlikely that the Fed will be given any further compelling reasons to act, and with the election looming, chances of a 2016 hike are receding. As LIBORs are already elevated, ¼% rate hike would have had limited impact, while geopolitical risks will mean markets are likely to remain volatile.
Macro Thoughts’ reaction to Brexit was that there would be headwinds, but this was not another ERM. Macro Thoughts may have been a bit too optimistic, underestimating the Bank of England’s ability to turn a drama into a crisis. At the time of Brexit, rating agencies downgraded the UK, Carney and the MPC panicked and agencies such as the IMF warned of the consequences and forecast recession. This week, the IMF upgraded the UK to the fastest growing economy of the G7'.
Just three months after the Brexit vote is too soon for investment decisions, as not enough facts are known, therefore a slow down in business confidence should have been expected and may have only been temporary. Now, decisions will be influenced negatively by a currency that is depreciating at the speed that Sterling has been and by a central bank whose actions and rhetoric are driving the currency lower. Uncertainty will only increase if the central bank looks as if it might lose control of the currency devaluation.​
'A weak currency has consequences; energy costs rise, foreign investors become nervous and strong domestic companies are left open to hostile foreign take overs...'
'Macro Thoughts August 5, 2016, ‘Macro Thoughts prefers to position in the 7-10year part of the curve, where it was possible to open a position at around 2.35/2.36 (the week’s low being 2.32). An initial target is 2.53 to 2.55 (Fibonacci resistance), which will be close to the top of a down channel that has been in place since 2013. A break of the channel should immediately target 2.80, the high of 2015'’.
Care will need to be taken with regard to Portugal’s bond yields over the next few weeks.
Since 2012, top tier global Hedge, Pension, Investment and Insurance Fund managers, as well as corporates and private individuals, have benefited from Macro Thoughts’ proven insight, market commentary, hedging, and investment strategies to leverage opportunities, with positive returns on over 75% of strategies, producing double digit returns for our clients over consecutive years.
Macro Thoughts is independently researched and draws on extensive macroeconomic and market experience gained in Fixed Income, Futures, Derivatives, Bond, Forex, Commodity and Equity Index markets and from strong Global Macro investment, risk taking and strategy backgrounds. Far-reaching product knowledge across asset classes enables us to consider hedging and investment strategies that reflect our expected market trends. Macro Thoughts is directed by Keith Grindlay, whose experience spans, somewhat uniquely, both the buy and sell side, having managed trading and investment desks at top tier institutions, ensuring all strategies are evaluated for risk/reward and the optimal instrument(s) for best leveraging the strategy suggested are employed.
Globally recognised for strong analytical skills, aligned with a particular aptitude for anticipating global economic events ahead of the majority of commentators, Macro Thoughts’ independent fundamental economic research and analysis and resultant strategies have a track record that assures exceptional results, with a service that surpasses the model of bank-supplied, partisan research and stands out from the general contributions on platforms that your clients and peers already have access to. The support and value offered by Macro Thoughts, delivering written research and analysis, presentations and consulting services, is backed by decades of macroeconomic and market experience and can be tailored to your specific requirements.
Member of the Royal Economic Society & EuroIRP, the European Association of Independent Research Providers.
www.macrothoughts.co.uk
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